Capital in the Twenty-First Century

We’re not great fans of the term “income inequality” as it relates to the growing gap between the super-rich and the rest of us. It has a connotation that the goal maybe ought to be “income equality.” Of course, that’s nonsense. Rather we worry about the growing “concentration of economic power” and its reverberations in the market, in politics, and in the commonweal (i.e. the health, safety and happiness of all the people of a community or a nation). Thomas Piketty is deeply interested in this problem. A product of the elite Ecole normale superieure, a professor at the Ecole d'économie de Paris, and a member of the prestigious École des hautes études en sciences sociales, Piketty is a French intellectual to the core and an economist’s economist. His data, which cover twenty industrialized countries and range back into the 18th century, reveal that the principal driver of concentrated wealth is the tendency of returns on capital to exceed the rate of economic growth. His analysis shows that the result is extreme inequality and that its consequences lead to social discontent and the undermining of democratic values. His prescription: a global tax on wealth and steep progressive tax rates on the highest incomes. Not surprisingly, Forbes has called him a “Darwinian Shill” and the 1% is racing to discredit him. Hmmmmmm…? Maybe he’s onto something!